Global funds under management reach USD84trn

Conventional assets under management of the global fund management industry climbed by five per cent in the first nine months of 2012 to a record USD84.1trn, some 13 per cent above the pre-crisis peak.

According to the 2012 edition of TheCityUK’s Fund Management Report, which is sponsored by Cannon Place, funds are likely to reach USD85.2trn by the end of the year.

Pension assets account for nearly 40 per cent of total funds, with the remainder split almost equally between mutual and insurance funds. Together with alternative assets and funds of wealthy individuals, total assets of the global fund management industry are around USD120trn.

The US remains by far the biggest source of funds, accounting for nearly a half of all conventional assets under management, according to the report. The UK is the second largest centre in the world, and by far the largest in Europe, with eight per cent of the total, closely followed by Japan.

Raquel Hughes, strategy director at TheCityUK, says: “On the whole, the global fund management industry has recovered quickly from the sharp fall in assets under management that occurred at the outset of the credit crisis. Most of this recovery has come from market performance rather than new inflows.

“We have found that the longer term effects of the economic slowdown include more cautious investment strategies and more diversification across asset classes and geographical regions. There is also a worldwide trend for fund managers to operate independently of banks and insurance companies.”

The UK fund management industry was responsible for a record USD5.1trn of funds at the end of 2011. This was up five per cent during the year and follows double digit growth in the two previous years. TheCityUK estimates that UK funds under management increased by a further four per cent in the first nine months of 2012, with the full year increase likely to reach around five per cent. Over a third of UK funds, or some GBP1.9trn, came from overseas clients, a higher proportion than in most other countries. Foreign firms operating in the UK manage more than a half of UK funds.

London is central to the UK’s strong international position. Other large fund management centres include Edinburgh, Liverpool, Glasgow, Aberdeen and Manchester. Fund management generated a UK trade surplus of some GBP4.3bn in 2011. The sector accounts for around one per cent of UK GDP and employs some 60,000 people.